Skip to Content

August 29, 2019

Supreme Court Rules on CEPA Action

In a case involving the Conscientious Employee Protection Act at N.J.S.A. 34:19-1 et. seq., the New Jersey Supreme Court recently held that a plaintiff is not required to precisely cite a statutory source of perceived criminal activity when bringing a claim under N.J.S.A. 34:19-3(c)(2), and upheld a jury verdict on that claim.  The Court did uphold the Appellate Division’s reversal of plaintiff’s claim related to his alleged protected activity of reporting fraudulent timekeeping because it was unsupported by sufficient evidence. Sergeant First Class Chiofalo v. State, – N.J. – (2019).

Plaintiff, Frank Chiofalo, was a member of the New Jersey State Police.  He filed a Complaint under CEPA against his employer and certain supervisors alleging he was subject to retaliation for engaging in protected activity related to two incidents: (1) a claimed refusal to destroy internal police documents; and (2) accusing a superior of not reporting his vacation time.  The trial Court denied the defendant’s summary judgment motion, but the Appellate Division reversed and dismissed the case.

The plaintiff appealed to the Supreme Court which upheld the dismissal of plaintiff’s claim for fraudulent time keeping but reversed the dismissal of plaintiff’s claim for retaliation for refusing to destroy documents.

The Supreme Court noted that plaintiff’s claim was brought under N.J.S.A. 34:19-3(c)(2).  While the Court noted that precedent has expressed that when a plaintiff brings an action pursuant to N.J.S.A. 34:19-3(c) the trial court must identify a statute regulation rule of public policy that closely relates to the complaint of conduct, the Court pointed out that it was unaware of any holding that explicitly imposed this requirement on plaintiff’s proceeding under Section (c)(2).  See generally, Dzwonar v. McDevitt, 177 N.J. 451 (2003).

The Court noted that there is no authority placing any express or implied obligation on a plaintiff to identify some legal source rendering activity fraudulent under the Section (c)(2).  While it noted the better practice is to identify a statutory or other basis for claiming objected-to behavior is criminal or fraudulent, the Court acknowledged that criminal or fraudulent activity is often apparent and commonly recognizable.  This distinguishes it from claims under Sections (c)(1) and (3) which refer to violations of a more general law or a rule or regulation promulgated pursuant to law or of a clear mandate of public policy.

The Court concluded by stating that it does not expect whistleblower employees to be lawyers.  However, while there are areas where conduct is so obviously criminal that one need not pinpoint a specific statute to avoid dismissal of a CEPA claim, the Court noted that if a defendant questions the source of law relied upon by the plaintiff, that source should be provided.  It noted that the defendant never argued that the CEPA claim was deficient for plaintiff’s failure to identify a specific law, rule, regulation or public policy that was violated by the alleged acts.  Noting that it is unfair to reassess summary judgment based on arguments that were not advanced, the Supreme Court upheld the trial Court’s denial of the summary judgment claim as to the destruction of documents.

August 7, 2019

New Jersey Employers Beware of New Wage and Hour Law

Today, Acting Governor Sheila Oliver signed S-1790 into law, which enhances enforcement of New Jersey’s wage and hour laws by providing additional fines and penalties for employers who fail to properly pay wages, benefits, or overtime to employees as required by the State’s already existing wage and hour laws. The law is being touted as one of the country’s strongest, which will make New Jersey a national leader in protecting workers from abusive and illegal practices by their employers.

Employers who violate the law’s protections are subject to back wages and liquidated damages equal to 200% of the wages owed, which is double the amount of liquidated damages currently allowed under both the state and federal wage and hour laws. Further, if an employee is improperly terminated in retaliation for raising a dispute about his or her wages or filing a wage claim, the employee is entitled to reinstatement. Significantly, the law provides that a presumption of retaliatory motive is created if an employer takes adverse action against an employee within (90) ninety days of the employee filing a wage complaint with the New Jersey Labor Commissioner, or of a claim or action being brought in Court by or on behalf of the employee. The law also creates an inference that an employer violated the law if the employer fails to present employee records in response to a wage claim.

The law extends the statute of limitations on all wage related claims to six (6) years and grants the Labor Commissioner enhanced audit powers. The law requires the Labor Commissioner to initiate a wage claim on behalf of an employee if the audit reveals that the employer failed to pay wages and/or benefits as required by the law. The law also provides for enhanced criminal sanctions against employers for failing to pay wages properly or in a timely manner, including the creation of a new crime of “pattern of wage nonpayment,” which is a crime of the third degree, and which applies if the employer has, on two or more prior occasions, been convicted of a violation of the law.

The law applies to all New Jersey employers with the exception of any employer in the construction industry whose employees are working under the provisions of a collective bargaining agreement. The law provides that officers of a corporation and any agents having the management of the corporation are deemed to be “employers”. The law takes effect immediately.

All New Jersey employers should take measures to assure that their wage and hour policies and practices comport with the new law. If you are concerned that your wage and hour policies and practices may subject you to civil or criminal liability, we can ease your mind with a thorough analysis and assessment of your policies and practices.

June 21, 2019

Appellate Division Rules on Disability and Adverse Employment Action

In a case involving a claim for failure to accommodate under the NJ Law Against Discrimination (LAD), the Appellate Division recently held that the plaintiff did not need to demonstrate an adverse employment action to establish a prima facie case of a failure to accommodate claim under the LAD. The Court also ruled that the Worker’s Compensation Act did not bar her bodily injury claim, but that the defendant should receive a credit based upon the amount it paid in her claim in accordance with  N.J.S.A. 34:15-40. Richter v. Oakland Board of Education, et al., – N.J. Super. – (App. Div. 2019).

Plaintiff, Mary Richter, was a middle school teacher who suffered from Diabetes. She alleged that she fainted while teaching due to low blood sugar levels when she was unable to eat lunch because the defendant failed to grant her an accommodation to eat lunch earlier.

Plaintiff’s case was dismissed because she failed to establish an adverse employment action in her claim for failure to accommodate under the LAD. The Appellate Division reversed.

Plaintiff alleged serious and permanent injuries as a result of falling down including, but not limited to, the loss of smell, meaningful loss of taste and dental and facial trauma. She filed a worker’s compensation claim and the defendant Board of Education paid over $18,000.00 in medical bills, roughly $10,000.00 in temporary disability benefits and $77,000.00 for the permanent injuries she suffered.

The Appellate Division first held that even though she presented no evidence of an adverse employment action due to the defendant’s failure to reasonably accommodate her diabetes disability, her claim could proceed. While an adverse employment action has generally been recognized as an element of a prima facie case of disability discrimination for failure to accommodate, the Appellate Division held that this case fell within the unusual situation where the employee could demonstrate that the failure to accommodate forced the employee to “soldier on” without a reasonable accommodation and there was no need to establish an adverse employment action because the circumstances cried out for a remedy.

The defendant argued that plaintiff’s claim should be dismissed under the exclusive remedy provision of the Worker’s Compensation Act at N.J.S.A. 34:15-8. However, considering plaintiff’s allegations in the light most favorable towards the non-moving party, the Court concluded that defendant had intentionally refused her accommodation request and it was substantially certain that she could suffer an event that could cause bodily injury. Therefore, her claim was protected under the “intentional wrong” exception to the Worker’s Compensation Act.

The Court then held that should defendant be found liable for plaintiff’s bodily injury claim under the LAD, it could assert a lien under N.J.S.A. 34:15-40(b) if the award recovered by plaintiff is the equivalent to or greater than the liability of the employer from the compensation award. Finally, the Court held that plaintiff should be permitted to admit her medical bills and lost wages as evidence before the jury.

April 11, 2019

Appellate Division Rejects Disability Claim Based on Obesity

In a case involving a claim under the New Jersey Law Against Discrimination (LAD), the Appellate Division rejected a plaintiff’s claim of perceived disability based on obesity because there was no direct or circumstantial evidence that defendants perceived the plaintiff to be disabled due to a medical condition that caused him to be overweight. Dickson v. Community Bus Lines, et al. – N.J. Super. – (App. Div. 2019).

Plaintiff, Corey Dickson, was employed as a bus driver for defendant, Community Bus Lines.  He weighed between 500 and 600 pounds and was often subject to comments about his weight.  Due to medical issues, he was ultimately placed on a leave of absence.

He filed a Complaint against the defendants alleging a hostile work environment based on his obesity.  The trial court dismissed the claim and the Appellate Division affirmed.

The Appellate Division noted that there was no evidence that plaintiff’s obesity was caused by a medical condition.  Plaintiff never established through the introduction of expert medical testimony that his obesity was caused by any medical condition, and furthermore the court noted that plaintiff could not prove that defendants “perceived” him as disabled because they presented several awards to him over his tenure with the company.

Finally, even if plaintiff could prove he was disabled within the intent of the statute, the trial court found no merit to plaintiff’s assertion that he was subjected to a hostile work environment because comments about his weight and size from co-workers, while hurtful, were not severe or pervasive enough to alter any conditions of his employment.  The Appellate Division agreed with the trial court’s analysis.

Finally, the Appellate Division rejected plaintiff’s argument that while he could not prove an actual disability under the statute, his supervisors and co-workers discriminated against him based upon their “perception” that he had a disability because of his obesity.  However, obesity alone is not a protected class under the LAD and, therefore, plaintiff’s claim failed.

April 1, 2019

Supreme Court Rules that Worker’s Compensation Claim Cannot Form Basis for LAD Claim

In a case involving the interaction between the New Jersey Law Against Discrimination and the New Jersey Worker’s Compensation Act, the Supreme Court recently held that a plaintiff who failed to attempt to enforce a worker’s compensation claim could not make a claim for failure to accommodate under the LAD, and further ruled that medical treatment does not qualify as a reasonable accommodation under the LAD. Caraballo v. City of Jersey City Police, et al., – N.J. – (2019). 

Plaintiff, Frank Caraballo, joined the Jersey City Police Department in 1973 as a police officer.  He later became a detective.  Ultimately, he sustained injuries in an on-the-job accident and filed a worker’s compensation claim.

Plaintiff was deemed a candidate for knee replacement surgery but refused to see a doctor who would be able to determine whether or not he could have the surgery.  He retired after being informed that the department would apply for an involuntary disability pension on plaintiff’s behalf.  He settled his worker’s compensation claim and then shortly thereafter filed a complaint against the police department asserting a cause of action under the LAD claiming that it had failed to authorize his knee replacement surgery and, therefore, failed to reasonably accommodate his disability.

The Supreme Court rejected his claim.  The court first held that plaintiff’s failure to utilize the Worker’s Compensation Act’s administrative remedies to obtain the replacement surgery precluded his failure to accommodate claim under the LAD.  The court next held that the alleged failure to provide an employee with knee surgery cannot serve as the basis for a viable failure to accommodate claim under the LAD.

The court noted that the question of whether medical treatment qualifies as a reasonable accommodation under the LAD was an issue of first impression.  The court concluded that while the LAD imposes a duty on an employer to modify the work environment and remove workplace barriers in an attempt to accommodate a physical disability of an employee, it does not require the employer to acquiesce to a disabled employee’s requests for certain benefits or remuneration.

March 7, 2019

New Law Expanding Paid Leave Could Have Big Impact on Small Employers

On February 19, 2019 Governor Murphy signed legislation enhancing paid family leave for New Jersey employees. In 2008, New Jersey became the third state to offer paid family leave insurance (FLI) after enacting legislation amending the New Jersey Temporary Disability Law. Only five other states, plus the District of Columbia, have paid family leave.  The new law will provide New Jersey employees with some of the most expansive paid leave coverage in the country in that it would increase the amount of time workers could take leave, raise the amount of weekly benefits, and expand the program to employees of smaller employers.  The increased cost of the bill’s benefits will be funded by an increase in payroll taxes.

Under the current family leave insurance program, eligible employees can receive up to six (6) weeks of benefits equal to two-thirds of their pay, with a maximum benefit of $633 per week in paid leave benefits. Starting on July 1, 2020, eligible employees can take up to 12 weeks of leave and receive up to 85% of their wages (with a cap of $859 per week). The new law expands the purposes for which employees can take paid leave by redefining “family members”.  The definition of “family members” will allow employees to take paid leave to care for grandparents and grandchildren, siblings, adult children, and in-laws.  The law also provides FLI benefits to a worker providing care for an individual whose close association is the equivalent of a family member.  However, the worker is required to give evidence of that association.  The new law provides paid leave benefits for domestic violence or sexual assault survivors and their family caregivers. It also expands the definition of family members under the New Jersey Family Leave Act (NJFLA) and under the New Jersey Security & Financial Empowerment Act (NJ Safe Act), which provide benefits to employees and their families who are the victims of domestic or sexual violence.

Advocates of the new law say that the current family leave program is underutilized because employees are unaware of their right to take leave, believe they will lose their jobs if they take leave or cannot afford the lower weekly benefits. The stated purpose of the new law is to protect workers against the hardships generally caused by involuntary unemployment, as it provides benefit payments to replace wages lost when a working family member must take time away from work to care for family members who are unable to care for themselves. Opponents argue that the new law will adversely impact smaller businesses, since the it lowers the exemption threshold, expands eligibility for paid leave, and increases the leave period to 12 weeks during any one year and the maximum intermittent FLI leave from 42 to 52 days.  Smaller employers may need to hire replacement workers or pay overtime for the longer duration of leave.  As of June 30, 2018, the new law will apply to employers with 30 more employees, whereas the current law only applies to employers with 50 or more employees.

The leave provided under the new family leave insurance program is not protected leave. Unlike the NJFLA and the NJ Safe Act, the family leave insurance program does not require employers to provide employees returning from paid family leave with the same or a comparable position.   However, given the interplay of family leave insurance with other laws including New Jersey’s paid sick leave law, the federal Americans with Disabilities Act, and the New Jersey Law Against Discrimination, employers are well-advised to consult with labor & employment counsel before terminating any employee who is out on leave under the family leave insurance program.

December 18, 2018

Minority Shareholder Properly Terminated as At-Will Employee

In a case involving an employment dispute between a company and a minority shareholder, the Appellate Division held that a minority shareholder who was an at-will employee of the company was properly terminated and she had no reasonable expectation of continuing employment. Metro Commercial Management v. Van Istendal, – N.J. Super. – (App. Div. 2018).

Defendant, Nancy Istendal, was employed by plaintiff, Metro Commercial Management, for more than twenty years before she was terminated. She was a minority shareholder in the plaintiff company and the shareholder agreement contained a stipulation that they were employees-at-will and could be terminated by Metro at any time for any reason.

Metro filed an action to compel her to sell her shares in accordance with an appraisal and she counterclaimed alleging minority shareholder oppression under N.J.S.A. 14A:12-7(1)(c). The trial court dismissed her complaint and the Appellate Division affirmed.

Defendant argued that it was error for the trial court to conclude that she was legitimately terminated because she had a reasonable expectation of continued employment as a minority shareholder. The court noted that termination of a minority shareholder’s employment may constitute oppression under the statute, but the shareholder’s agreement clearly stated that shareholders were employees-at-will and, therefore, the defendant was properly terminated.

October 4, 2018

Arbitration Agreements — Waiver of Punitive Damage Claims Unenforceable

In a case involving an action under the New Jersey Law Against Discrimination (LAD), the Appellate Division recently held that an arbitration agreement signed by a discharged employee which barred the employee from suing for punitive damages was unenforceable because it violates public policy. Roman v. Bergen Logistics, et al., – N.J. Super. – (App. Div. 2018).

Plaintiff, Milagros Roman, was employed by Bergen Logistics as a Human Resources Generalist.  She was terminated and she alleged her supervisor sexually harassed her and created a sexually hostile work environment during her employment.  She also alleged that after she objected to his conduct and advances, he retaliated against her and terminated her employment.

Plaintiff had signed an arbitration agreement when she was hired.  The agreement obligated her to arbitrate all claims against the company and provided that, by signing the agreement, she waived the right to a jury trial and to a claim for punitive damages.

The trial court found that the agreement was valid, but the Appellate Division reversed.  The Appellate Division held that the arbitration agreement’s punitive damages waiver violated the public policy underlying the LAD and rendered the agreement unenforceable.  However, the court also held that the balance of the arbitration agreement was valid and, therefore, plaintiff was obligated to arbitrate her claims, including a claim for punitive damages.

The Appellate Division did reject plaintiff’s claim that she did not knowingly enter into an agreement to arbitrate the claims asserted in her complaint and the arbitration agreement did not include a sufficiently clear waiver of her right to litigate her claims in court.  The Appellate Division pointed out that the agreement expressly provided, in bold letters, that plaintiff and Bergen Logistics waived their right to a trial by jury.  The agreement also made clear that the parties opted for arbitration in lieu of a jury trial.

August 27, 2018

Courts Will Enforce Arbitration Agreements

In an unpublished opinion issued on August 23, 2018, the NJ Appellate Division enforced an arbitration agreement signed by an employee at the time of her hire, but the court invalidated the provision in that agreement that precluded the employee from seeking punitive damages. In Roman v. Bergen Logistics, a terminated employee sued her employer for harassment and hostile work environment in violation of the New Jersey Law Against Discrimination (NJLAD). The trial court issued summary judgment in favor of the employer enforcing the arbitration agreement under the Federal Arbitration Act (FAA) and ruling that the employee was bound to go to arbitration as per the agreement she signed at the time that she was hired.

On appeal, the court sustained the summary judgment. However, the appellate court invalidated the agreement’s bar on punitive damages. The court noted that the NJ legislature amended the NJLAD in 1990, to ensure that punitive damages are an available remedy, and that the availability of punitive damages fosters the law’s purpose of eradicating workplace discrimination by focusing on deterrence and punishment of particularly egregious conduct. The court expressed concern that barring the recovery of punitive damages allows an employer’s upper management to be “willfully indifferent” to the most egregious forms of workplace discrimination without fear of punishment. Thus, the court invalidated the provision barring punitive damages on public policy grounds and because it eviscerates an essential purpose of the NJLAD.

While the unpublished opinion is not precedential, it does reinforce the view taken by the NJ courts in evaluating arbitration agreements. That is, the courts will generally enforce an arbitration agreement pursuant to the FAA; provided, however, that the agreement does not violate public policy or otherwise interfere with protected rights. If you are concerned that your form of arbitration agreement may be challenged in court, we can ease your mind with a thorough analysis and assessment of your form of agreement.

August 13, 2018

New Jersey Equal Pay Act: 10 Steps to Compliance

1.  Implement a bona fide seniority or merit system:
a.  Seniority System:
i.  Allocate benefits and compensation according to length of service.
b.  Merit System:
i.  Must be a structured procedure;
ii.  Employees must be evaluated at regular intervals using pre-determined criteria;
iii.  Can be based upon objective standards such as a test or a subjective standard (subjective standard will be strictly scrutinized for compliance).

OR:

2.  Audit job titles and job descriptions:
a.  Review job titles and job descriptions across all operations & facilities;
b.  Identify jobs with “common core” tasks;
c.  What are the specific duties and requirements of each job? What skills, effort and responsibility are required?
d.  Group together jobs that are “substantially similar”?

3.  Compare substantially similar jobs for compensation differences:
a.  Are the employees in substantially similar jobs paid differently?
b.  Include other benefits such as health care, bonuses and pension contributions as part of compensation for each job.

4.  Evaluate whether pay differences are justified under the law:
a.  Can the pay differences be justified based upon one or more bona fide legitimate factors such as training, education, experience or quantity & quality of production?
b.  Is each factor applied reasonably?
c.  Do one or more factors account for the entire differential?
d.  Is each factor job-related?

5.  Evaluate whether there are alternative business practices that would serve the same objective without causing the pay differential.

6.  Adjust pay differentials that cannot be justified under the law:
a.  Do not reduce the rate of pay of any employee to comply with the law.
b.  Compliance can only be achieved by increasing the rate of pay.

7.  Revise existing employee handbooks and policies:
a.  Prohibit pay discrimination for substantially similar jobs;
b.  Prohibit retaliation against employees who request, discuss or disclose compensation or other job-related information covered by the law.

8.  Evaluate hiring, recruitment and promotion procedures:
a.  Ensure equal employment and advancement opportunities;
b.  Do not investigate or ask job applicants about compensation history;
c.  Compensate jobs based upon the duties and responsibilities performed and on who fills the position.

9.  Train HR professionals, managers and other key employees responsible for compensation and benefits to be familiar with the law’s requirements.

10.  Work closely with your outside professionals to maximize your compliance efforts and reduce potential liability.

If you have questions or concerns about the New Jersey Equal Pay Act, contact Joseph Maddaloni, Jr. at jmj@spsk.com or (973) 540-7330, or Cynthia L. Flanagan at clf@spsk.com or (973) 540-7331.